CCD shuts 90 stores in FY18, plans to refurbish 175 in FY19

Coffee Day Global which owns cafe chain Cafe Coffee Day, a subsidiary of Coffee Day Enterprises, has shut 90 small format stores in FY18 and plans to refurbish around 150-175 stores in FY19, VG Siddhartha, chairman and managing director, Coffee Day Enterprises, said at a post-earnings conference call on Thursday.

VG Siddhartha, chairman & MD, Coffee Day Enterprises.

Coffee Day Global which owns cafe chain Cafe Coffee Day, a subsidiary of Coffee Day Enterprises, has shut 90 small format stores in FY18 and plans to refurbish around 150-175 stores in FY19, VG Siddhartha, chairman and managing director, Coffee Day Enterprises, said at a post-earnings conference call on Thursday. The company, as of March 31, had 1,722 operational stores. It plans to open around 130-135 stores in FY19 with an investment of around Rs 40 lakh for each store.

“Many of our stores are of 500 sq ft without washrooms and we are trying to open bigger sized stores of around 1,000-1,200 sq ft in the nearby location by shutting the small stores. In some cases where the store is not profitable we shut down. We will adopt a similar strategy in FY19. The small format stores are no longer working as the company has grown and sometimes 12-15 people come at a time for meetings, so we are adopting a bigger cafe type format for convenience of customers with proper washroom facilities. For opening of new stores the company is not looking at any fresh fund raising and will fund it through internal accruals,” Siddhartha said.

Further, the company increased product prices by 4.5% in May to improve its profitability. It doesn’t intend to hike prices any further in the near future. In Q4FY18, Coffee Day Global reported an 18% year-on-year increase in net profit to Rs 8.1 crore. Revenue was up 1% year-on-year to Rs 523.5 crore. Earnings before interest taxes depreciation and amortisation (Ebitda) grew 8% to Rs 78.1 crore. Same-store-sales growth in Q4FY18 was 8.20% compared with 6.9% in Q4FY17. The company had 47,747 vending machines operational across the country compared with 41,845 in Q4FY17.

In FY18, the company’s net profit was up 40% to Rs 37 crore. Revenue was up 14% to Rs 2,016.1 crore. “To boost sales, the company has strengthened the value proposition with special offer on newly launched Milkshakes to build trials and repeats. At present 34% of sales is driven by food while 64% is beverages,” he said.

As of March 31, 2018, the company had net debt of Rs 3,200 crore and is looking at replacing it with lower interest costs. However, the company doesn’t intend to lower its debt in the near future.